Gold is on the backfoot in the open
. In the meantime, the $1,914 area could act as immediate support ahead of the $1,895-$1,890 region. A convincing break through the latter would set the stage for a slide towards the next relevant support near the $1,872-$1.870 region.
On the flip side, the overnight high, around the $1.950 area should cap the immediate upside. Sustained strength beyond might trigger a short-covering move and push gold prices to an intermediate hurdle near the $1,964-$1.966 zone. The momentum could further get extended towards the next relevant barrier, around the $1,985-$1,988 region, above which bulls might aim to reclaim the key $2,000 psychological mark.
Investors, however, seemed optimistic about the possibility of a diplomatic solution to end the war ahead of the Russia-Ukraine peace talks, which are set to continue on Friday. This was evident from a generally positive tone around the equity markets. The risk-on impulse, along with hawkish Fed expectations, pushed the US Treasury bond yields higher and underpinned the US dollar.
The markets seem convinced that the Fed would adopt a more aggressive policy stance and hike interest rates by 50 bps at the next two meetings to combat stubbornly high inflation. The bets were reaffirmed by Thursday's release of the US Core PCE Price Index, which rose to 5.4% YoY in February from the 5.2% previous. Despite the supporting factors, the USD bulls seemed reluctant and preferred to wait for the release of the closely-watched US monthly jobs data.
The US economy is expected to have added 490K jobs in March, down from 678K in the previous month. Meanwhile, the unemployment rate is anticipated to edge lower to 3.7% from 3.8% in February. Nevertheless, the data would influence the Fed's policy outlook and drive the USD demand. This, along with fresh developments surrounding the Russia-Ukraine saga, will assist investors to determine the next leg of a directional move for gold.
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